Annuities: still working hard
This is why annuities – though waning in popularity – remain an important component of the at-retirement product suite. Investors are more likely to enter drawdown when they reach retirement. But an annuity option remains open to them, and may become attractive if maintaining a sustainable income from drawdown proves too demanding.
Ageing and decision-making
Another feature of ageing is its tendency to bring about cognitive decline. This can affect people’s abilities both to make decisions and – as ABI research shows – to seek help with making decisions. And that includes financial decisions. Yet, despite their cognitive decline, people’s tendency to be confident in their decision-making remains. This is an important but difficult subject to bring up with clients.
Cognitive decline, dementia and Alzheimer’s disease will affect more people as longevity increases. It’s “one of the most challenging intergenerational issues facing the investment industry”, according to a report by SSGA.
Awareness of the challenges
Being aware that living longer brings many financial risks is not enough in itself to solve all the problems. But it’s a sound basis on which to build a robust investment strategy.
For further insight and expert guidance, please visit Scottish Widows Change Hub.